A few months after "Trump accounts" were approved by Congress, the administration is issuing further guidance on how parents can open the savings accounts for their children, as a prominent billionaire pledges an infusion of cash to the program.

The accounts were approved in July as part of President Donald Trump's massive tax and spending bill, once called the "Big Beautiful Bill" and later renamed as the "Working Families Tax Cuts" legislation. The accounts are described by financial services company Charles Schwab as a cross between a traditional individual retirement account, or IRA, and a 529 college savings account. Unlike other accounts, the Trump accounts can begin at birth and offer $1,000 seed bonus to accounts belonging to babies born during Trump's second term.

But babies born before Trump's second term will also have the chance of receiving a cash bonus.

Michael Dell, founder and CEO of Dell Technologies, announced Dec. 2 that he is giving more than $6 billion to the accounts, expected to cover $250 deposits to 25 million "Trump accounts." The donation applies to children born between 2016 and 2024 who are not covered in the federal program reserved for newborns, born in certain zip codes to parents making a medium income below $150,000.

The administration is encouraging other billionaires and companies to follow suit.

U.S. Treasury Secretary Scott Bessent said he expects other contributions to follow for the new Trump accounts, which he said at a Dec. 3 New York Times Summit will help the eligible American children participate in asset appreciation.

Here's what to know about the Trump accounts.

Who is eligible to create a 'Trump account'?

Parents or guardians of children born on or after Jan. 1, 2025, through Dec. 31, 2028, can open an account. Children must be U.S. citizens.

Families can open accounts in early 2026 and start contributing on July 4, 2026, according to the program's official website.

How do 'Trump accounts' work?

The accounts are like an early investment fund for children.

Parents and others may contribute up to $5,000 a year into the accounts until the child turns 18. An employer may contribute up to $2,500 toward the $5,000 cap, and state and local governments and private charities will also be allowed to make contributions.

Similar to retirement accounts, the Trump account funds are tied to a mutual fund or index fund that is impacted by the performance of the stock market.

The funds are meant to help pay for education, training or a first-time home purchase once the child hits adulthood. Money can go into, but cannot be withdrawn from, an account until the child turns 18, at which point it will function like a traditional IRA.

Contributing: Reuters; Francesca Chambers and Daniel de Visé of USA TODAY.

Kathryn Palmer is a politics reporter for USA TODAY. You can reach her at kapalmer@usatoday.com and on X @KathrynPlmr. Sign up for her daily politics newsletter here.

This article originally appeared on USA TODAY: How do 'Trump accounts' for kids work? See benefits, eligibility

Reporting by Kathryn Palmer, USA TODAY / USA TODAY

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